Local News Inc is considering expansion of production facilities in order to meet increased demand, and it is estimated that this project will have an IRR of 10%. The firm has been utilizing 40% debt/60% equity as its target capital structure. It has a bond issue with 20 years to maturity outstanding that has a coupon rate of 6%. However, new debt would yield 7.25% before tax. If Area News has a cost of equity of 12%, what is its WACC and should it undertake the expansion? Use a tax rate of 21%. 8.60%: yes 8.24%; yes 10.00%; no 9.49%: yes 12.67%; no